What is the best approach towards engaging the agri-food market with new products and services? Are you a developer of a new technology that seeks opportunities, aka problems that your latest creation solves? Or do you recognize this great void in the market that begs a solution you can surely fill by hiring a lot of geniuses?
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Wednesday, December 6, 2017
Tech Driven vs Market Driven Companies
What is the best approach towards engaging the agri-food market with new products and services? Are you a developer of a new technology that seeks opportunities, aka problems that your latest creation solves? Or do you recognize this great void in the market that begs a solution you can surely fill by hiring a lot of geniuses?
Techies Rule
The “geeks” of the world, and I use this term endearingly,
will tell you that the first method of market engagement is far superior to the
MBA
way. There are many companies that have had great success creating software,
hardware, services, systems and devices and then finding the nail that fits
their hammer. On the other hand the road to riches is littered with innovative
technology that could not gain acceptance by potential customers with a very clear
and well-defined need.
PowerPoints and Business Plans
Taking the business route might seem to be a more prudent
way to succeed in the market. Unfortunately, the development of a detailed
business plan does not insure that those “hockey stick” sales forecasts will be
achieved. This is not to say that one shouldn’t have a plan but sometimes all
of that market research, positioning, pricing, messaging, profiling and needs
analysis may not be enough to get that startup across the finish line.
Examples of The Tech First Approach
Two companies, Iteris and Descartes Labs, have some very
similar beginnings when it comes to launching their businesses. One introduced
and subsequently proved the value of their technologies in other non ag market
sectors with a bona fide solution to a well-defined problem. The other leveraged their public sector knowledge and technology for use in the forecasting of commodity yields. Each had their
beginnings as a collection of some very smart people who had done the heavy
lifting technically and found customers who, for the most part, recognized the
ROI of those offerings very quickly.
Iteris
Iteris launched their business by solving the problems of
logistics and traffic flow optimization for municipalities as well as for private
industry. Understanding the science of big data analysis provided them with the
wherewithal to leverage that knowledge into ag and food. The term they use is
“informatics” or informed decision-making.
Descartes Labs
Descartes Labs was founded by a group of astrophysicists,
cosmologists and big data analysts out of the prestigious Los Alamos National Laboratory who had a
sense that their skills and knowledge would deliver value to a myriad of business
inefficiencies that could be solved geospatially.
Innovative Technology + Business Plan + Capital + Leadership
= Success
Let’s just say that with any one or two or even three of the
above companies will not get to the equals goal. It seems that by putting tech first and
building a business around that might be the best path towards success. The smart money is on "the geeks". Sales & Marketing and Vice Versa
How We View Ourselves is Who We Are
A friend and I have had a long running discussion about the way
that many companies have departmentalized the functions of “sales and marketing”.
First of all it seems that many agri-food technology
startups put them in the same box on the org chart. While it might seem logical
due to a perceived inherent close relationship between the two, upon further
inspection these distinct disciplines are as different as software development
and accounting. Which begs the question why any organization would have IT coupled
with accounting – which some do. But that is a different discussion entirely.
Looking at the functions of each one sees that while they
are tasked with the ultimate goal of moving product or services to the intended
market their methods for doing so are not in the least way related.
There is a Difference
Marketing, and I am going to simplify here, is all about
product definition, perception, branding, pricing, positioning, messaging, promoting and all of that
other stuff that goes into laying the foundation for the sales staff as a means
to assist in the adoption process.
Sales is the act of converting a prospect into a customer by
having those people or organizations exchange money for those products and
services. OK. I have really oversimplified that one!
It is very difficult to have one without the other. Salespeople
are not good marketers and we all know that marketers can be lousy salespeople.
We need the unique expertise and talents of each in order to be successful in
the agri-food technology market segment.
Carts and Horses
Secondly, a common error in establishing the department name
is when companies assign the name as “Sales and Marketing”. Combining them is
the first mistake but when we don’t lead
with marketing in order to support sales and not the other way around we have
missed a key step towards success. It may seem trivial but by transposing these
activities we fail to recognize the true nature of the challenge in engaging the market.
In any business planning process one cannot possibly
establish sales projections without conducting the necessary market research
first. Market size, demographics, customer profiling, value propositions,
pricing, SWAT analysis and all the other things that marketing provides the
sales group are what position them for success.
Thursday, September 28, 2017
The Case for Case Studies
Why? Why not?
I get it. Documenting the value of one’s offerings is a lot of work. The challenges are many and most agri-food technologists are ill prepared to tackle the job of quantifying a return-on-investment for their products and services. It is not impossible, though, and those who go through the exercise will find that the results can help differentiate their offerings from those of their competitors.The Hurdles
Customers are quick to provide those quick quotable quotes as to what they think about a product. Most marketing and sales folks may jot those words of endorsement down but when those innovative market leaders are pressed as to how it actually makes or saves them money the usual response is a little less specific. When questioned as to “how much” a product adds to the bottom line the answer is typically “not sure about that”.
One excuse might be that they are not open to sharing
information about ROI because they don’t really want their vendor to know that
they may have not priced their products in line with the value. Another reason
is that they probably have not taken the time to calculate the actual return.
Denominate, Denominate, Denominate
Clients are usually open in disclosing their positive, and
even negative, experiences when it comes to how well a tool of their trade might
have performed. All too often in the excitement of hearing something positive
the company representative just leaves it at that.
The key is to do what one old college professor used to say – “denominate,
denominate, denominate”. That is ask the question that leads to the question
that leads to the question as to “how does that REALLY help you?” Or when given
a response from a customer it is important to ask the follow up question “why
is THAT important?” and finally “can we go through the numbers on that topic?”.
Quantification
Some products are easier in assessing real value. Take
robotics, for example. Replacing a crew of workers with a mechanized weeding
and thinning machine can be denominated fairly simply. However, one still has
the issue of quality of the work completed with humans vs the consistency of
the equipment.
Biotech savings, yield and quality are pretty straight
forwards, too. Roundup Ready corn and soybeans demonstrated fairly easily the elimination
of costs of production, yield increases and decreases in defects.
Information systems present the biggest challenge in
determining ROI. Saving an hour here or there may mean that more time can be
spent engaging customers and prospects to determine their needs for more
products and services. How do you assess that? Or worse still what is the value
of better information overall? Better informed decisions? Try measuring that. Roll Up the Sleeves
It takes effort to get to the dollars associated with efficiency gains or the increase in yield and/or quality. That being said – it can be done and it can be well worth the effort. Without this information companies might be left with "take my word for it".Tuesday, June 20, 2017
Business Inertia and Technology
Overcoming the Lack of Momentum
Drive Me Crazy
We see it in our everyday lives each and every single day. How
many of you drive a different way to work occasionally just to experience
something new or order that caramel macchiato
frappuccino instead of your usual regular drip with room at your
favorite coffee establishment? Never?
Yet when it comes to business and change those of us who promote
new technology to prospective customers just become frustrated over the obvious
need to do something different and improve – if nothing else simply because it
is the right thing to do.
People are Businesses – Businesses are People
It seems that in the corporate world more decisions should
be driven by economics rather than intuition and gut instinct. If this were the
case then they would operate at an efficiency level that would be accelerating
at an alarming rate.
The reality is that this is not reality so we collectively
plod along in our safe and familiar worlds rarely venturing into anything that
remotely resembles the unknown. This is never truer than in the adoption of new
technologies.
Continuous Improvement without Change?
It appears that this Yen and Yang, push and pull exercise
that we encounter in business with these improvement programs is what, ultimately,
gives us heartburn and results in inertia.
It somewhat reminds me of the old Chinese finger trap. Insert your two index fingers
into the tube and now try pulling them apart. Result? Inertia.
The Shameless Plug for Consultants
Outsiders see what is not so blatantly evident to those people who have held the same or a similar job for several decades. If you can remember when you were first hired you probably thought to yourself (you wouldn’t want to rock the boat on your first days) “why do they do it like that?” Over time you become accustomed to the way things work and become part of the problem.
I have heard it all before; “Consultants are people who look
at YOUR watch and tell you what time it is.” “Consultants are people to tell
you where you need to go but can’t really describe how you should go about
getting there.”
Here is the thing. Many of them will tell you the truth. The
good ones are trying to work themselves out of a job rather than work their way
into the next one. Bringing someone in to tell you what is broken can be a path
towards continuous improvement. Hey, I tried one of those sweet dessert drinks
once. It was terrible. But at least I tried it. Friday, February 17, 2017
Decline in Ag and Food Tech Investment
on ag and food technology funding for 2016. Not surprisingly many in the industry are finding that capital investments have declined significantly from the previous year. The numbers tell us that there are 30% fewer dollars being directed to this market sector overall. On a high note the number of startups was up 10% last year. More companies entered the fray in the hopes of grabbing that big brass ring.
Hit the Reset Button
When asked as to
the “why” for this sharp decline in investments AgFunder CEO Rob Leclerc
stated, "Investors are becoming more aware of the challenges in distribution
and adoption rates. New investors in this space didn't realize how hard
distribution might be. It's raising
risk, it's seeing companies not growing as fast as they'd like them to grow,
and that's a real challenge," he said. https://agfunder.com/
The Influencers Hold the Cards
So two things
here require some further discussion. Adoption rates and distribution. At first
glance one might be inclined to say that without one you cannot have the other.
He is right in separating these two challenges in that distribution is driven
by the gate keepers of technology for growers, or as we commonly refer
to them, “trusted advisors”.
No Such Thing as a Free Lunch
While these
companies understand the need to offer technology services, or any services for
that matter, they are also well aware of the risk involved in not being able to
charge the customer a fair price for them. It may be that in order to prove the
value in using these new tools they may just have to offer them at a discounted
rate or even worse - give them away for free.
Back to the Drawing Board
Investor are
finding that growers have not been convinced of the value, the retailers - not
wanting to lose money on their service offerings - are hesitant to buy and the
tech companies can’t give it away because they told their investors that they
would provide a significant return on their capital contributions in a
relatively short period of time. Thank heavens for the early adopter retailers who are trying to establish an advantage over their competitors!
There are ways
to crack this nut. It might just require some new strategies in order to do so.
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